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A decrease in equilibrium price and an indeterminate change in equilibrium quantity is most likely caused by:

A. decrease in demand and no shift in supply.
B. decrease in supply and no shift in demand.
C. increase in supply and a decrease in demand.
D. increase in demand and an increase in supply.

1 Answer

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Final answer:

A decrease in equilibrium price with indeterminate change in equilibrium quantity is most likely caused by an increase in supply and a decrease in demand.

Step-by-step explanation:

The situation described in the question is where there is a decrease in equilibrium price with an indeterminate change in equilibrium quantity. The scenario most likely to cause this outcome is option C: an increase in supply and a decrease in demand.

When supply increases, it tends to push prices down because there is more of the good or service available. Conversely, when demand decreases, it also leads to a lower price as there are fewer buyers interested at previous prices. However, the change in equilibrium quantity is indeterminate because the increase in supply could lead to more quantity being sold, while the decrease in demand could mean less quantity is sold. The net effect on quantity is uncertain and depends on the relative magnitude of the supply and demand shifts.

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